Acuity Brands, Inc.(NYSE: AYI) stock lost over 14% on Jan 9th, 2018 (as of 10:32AM EST; Source: Google finance) on the back of the lower than expected first quarter of 2018 performance.
The group’s net sales fell 1% yoy to $842.8 million during the quarter against pcp hurt by weak sales in the home center/showroom channel and certain international sales channels, including the U.K and Mexico. This decline in the home center/showroom channel was mainly on the back of the in-house branding strategies being deployed by certain customers for select products in certain categories. The decline in international markets was on the back of the lower demand hurt by economic and or political headwinds.
Operating profit fell 6.2% yoy to $118.6 million during the quarter hurt by ongoing tepid market conditions. On the other hand, the group continued to strengthen its position in offering IoT-enabled business solutions with their Atrius platform being deployed across nearly 160 million square feet of indoor spaces, leveraging more than 1.6 million networked sensors. The group has enhanced deployments and increased active pilots with several of the largest U.S.-based and certain European-based retailers as well as other key vertical applications, including certain airports
Gross profit fell $9.4 million, or 2.6 percent, to $350.2 million compared with $359.6 million against the prior-year period on the back of weak top line, unfavorable price/mix, and rising input costs for certain commodity-related items, like steel, which partially offset falling costs for certain LED components and productivity improvements. Meanwhile, the group’s Net income lost 12.5% yoy to $71.5 million.
The group is still cautious regarding the rebound their end markets over the next quarter and uncertain related to both infrastructure spending as well as federal regulatory and trade policies. On the other hand, the recent passage of the U.S. Tax Cuts and Jobs Act might have a favorable impact on future demand for many end markets. They continue to forecast the growth rate for lighting and building management solutions in the North American market, which includes renovation and retrofit activity and comprises over 97% of the Company’s revenues, which would be up low single-digits for fiscal 2018, reflecting an expected rebound in the second half of the year.